Question

Evaluating Turnover and Nontraditional Efficiency Ratios Across Industries
The following information is taken from publicly traded retailers. The data come from the balance sheet, income statement, and Item 2 on the companies’ Form 10‑K filings. Use the information to answer the requirements.

			Average	Retail SQ	# of
$ millions	Revenue	COGS	Inventory	Footage (000s)	Stores
Autozone	$10,660	$4,902	$3,717	41,066	6,202
Costco	134,497	121,715	9,915	110,700	762
Home Depot	102,793	71,043	12,670	237,700	2,287
Lowe’s	67,744	48,396	11,378	209,000	2,015
O’Reilly	9,059	4,237	2,947	38,455	5,219
Walmart	486,143	374,623	41,825	1,129,000	11,361

Required

a. Compute the days inventory outstanding (DIO) for each company.
Note: Do not round until your final answer; round your final answer to the nearest whole day.

	DIO
AUTOZONE	....	days
COSTCO	....	days
HOME DEPOT	.....	days
LOWE'S	.....	days
O'REILLY	.....	days
WALMART	.....	days

b. Compute the gross profit margin for each company.
Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555%).

	DIO
AUTOZONE	......
COSTCO	......
HOME DEPOT	.....
LOWE'S	.....
O'REILLY	....
WALMART	.....

c. Compute the following two nontraditional efficiency metrics: Revenue per square foot and Revenue per store.
Note: Round your answers to two decimal places (for example, enter 6.78 for 6.77555).

	Revenue per SF	Revenue per store
AUTOZONE	......	......
COSTCO	.....	.....
HOME DEPOT	.....	.....
LOWE'S	......	.....
O'REILLY	....	.....
WALMART	.....	.....

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Answer 1

Given,

$ millions	Revenue	COGS	Average Inventory	Retail SQ Footage (000)	# of Stores
Autozone	10660	4902	3717	41066	6202
Costco	134497	121715	9915	110700	762
Home Depot	102793	71043	12670	237700	2287
Lowe's	67744	48396	11378	209000	2015
O'Reilly	9059	4237	2947	38455	5219
Walmart	486143	374623	41825	1129000	11361

Answer a)

Inventory Outstanding = Average Inventory / COGS * 365

Autozone Inventory Outstanding= (3717/4902) * 365 = 227 days

In similar ways, remaining inventory days have been calculated

Answer b)

Gross Profit Margin = (Revenue - COGS) / Revenue

Autozone Gross Profit Margin = (10660-4902)/10660 = 54%

In similar ways, remaining gross profit margins have been calculated,

Company	Gross Profit Margin
Autozone	54.0%
Costco	9.5%
Home Depot	30.9%
Lowe's	28.6%
O'Reilly	53.2%
Walmart	22.9%

Answer c)

Revenue Per square foot = Revenue / Total Square foot

Here, Revenue is in millions and square foot is in thousands therefore we need to convert thousand square foot in millions

Autozone Retails sq foot (in millions) = 41066 / 1000 = 41.066

Autozone Revenue Per square foot = 10660 / 41.066 = 259.58

Company	Revenue	Retail Sq foot	Revenue Per square foot
Autozone	10660	41.066	259.58
Costco	134497	110.7	1214.97
Home Depot	102793	237.7	432.45
Lowe's	67744	209	324.13
O'Reilly	9059	38.455	235.57
Walmart	486143	1129	430.60

Revenue per store = Revenue / Total no of stores

Company	Revenue	# of Stores	Revenue Per Store
Autozone	10660	6202	1.72
Costco	134497	762	176.51
Home Depot	102793	2287	44.95
Lowe's	67744	2015	33.62
O'Reilly	9059	5219	1.74
Walmart	486143	11361	42.79

Concluded.